Looking back to 3 days ago, Ironwood Pharmaceuticals (IRWD) priced a 13,725,500 share secondary stock offering at $12.75 per share. Buyers in that offering made a considerable investment into the company, expecting that their investment would go up over the course of time and based on early trading on Friday, the stock is now 9.5% higher than the offering price.Investors who did not participate in the offering but would be a buyer of IRWD at a cheaper price, might benefit from considering selling puts among the alternative strategies at their disposal. One interesting put contract in particular, is the May put at the $12.50 strike, which has a bid at the time of this writing of 80 cents. That would result in a cost basis of $11.70 per share before broker commissions in the scenario where the contract is exercised. If the contract is never exercised, the put seller would still keep the premium, which represents a 6.4% return against the $12.50 purchase commitment, or a 25.4% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Use Options For a Chance To Buy IRWD at a 16% Discount
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